by Donna Leinwand Leger, USA TODAY

by Donna Leinwand Leger, USA TODAY

Charlie Shrem, the Bitcoin pioneer charged with money laundering, resigned Tuesday from the board of the Bitcoin Foundation, the trade group that promotes the unregulated cybercurrency.

Prosecutors say Shrem, CEO of the Bitcoin exchange company BitInstant.com, helped a vendor on Silk Road, an illegal online drug marketplace, exchange cash for Bitcoin. Keith Miller, an attorney for Shrem, declined to comment on the charges.

Shrem was an early adopter of the currency and helped found the Bitcoin Foundation. He submitted his resignation to the foundation's board on Tuesday morning, Jinyoung Lee England, spokeswoman for the organization, wrote in a blog post.

"As a foundation, we need to remain focused on our core mission to standardize, protect and promote the Bitcoin core protocol," Matonis said. "While Charlie has contributed a great deal of personal effort and resources to enhance the adoption of Bitcoin worldwide, a prolonged legal dispute would inevitably detract from advancing that core mission."

Bitcoin, launched in 2009, is generated by a computer algorithm and traded person-to-person rather than through banks. The currency is not illegal in the United States. A growing number of businesses accept the currency, including restaurants, a university and Web-based businesses.

Prosecutors charge Shrem, 24, and Robert Faiella, 52, with selling more than $1 million worth of the cybercurrency to people doing business on Silk Road. Silk Road, shut down by the FBI on Oct. 2, required buyers and sellers to transact their business in Bitcoin.

Court papers say Faiella ran an underground Bitcoin exchange on Silk Road from December 2001 until the site closed. He filled the orders for Bitcoins through Shrem's company, BitInstant.